Factfinding, KYC and UYC

"The information about clients is absolutely vital and nobody should argue with KYC, but what about Understanding Your Client?"

The history of factfinding, for those new generation advisers out there, commenced with very basic client details, just enough to get a quote - the 'back of a fag packet' approach.

Over the last 30 years the factfinding process has gone from one page to a templated booklet, then to an electronic version on a laptop with integration to the back office and then on a tablet.

Whilst advances have been made in recording far more data, the focus is still all around capturing hard facts and demonstrating KYC. This is still a time consuming and dull task, with clients often not having the necessary documentation, policies to hand, no idea on how their earnings are spent, etc.

The information about clients is absolutely vital and nobody should argue with KYC, but what about Understanding Your Client?

The skill of the adviser lies in dealing with clients, not necessarily spending time on this tedious task. The adviser needs to concentrate on the client relationship and motivations, the Understanding Your Client; without this, the client may be tempted to go to one of the many and growing number of comparison or direct websites for their mortgage and/or protection needs. Yes, these sites may have AI and be very smart, yes the client can input all of the necessary hard facts they are asked for, but the sites cannot replace the insightful conversations between adviser and client to obtain the soft facts, the UYC.

The adviser understands if they are wanting to buy a house to rent or a home for the family. Yes, the deals available will be different and a direct site would pick that up, but the site would not discern the client’s emotional engagement and drivers that require the adviser’s people skills.

If they are buying a family home for instance, how would they feel if in the event of their death or ill health their family could no longer afford their home? The warning statement that advisers are all too familiar with should be used as a discussion point with the client:

'Your home may be reposessed if you do not keep up repayments on your mortgage'.

The danger is that familiarity breeds contempt, much like when frequent flyers pay little attention to the cabin crew demonstrating where the exits are and how the life jackets work. However, if flying for the first time, they would feel they needed to know. In the same way, particularly with first-time buyers, they should be treated like first-time flyers, explain what the lender's warning statement means, where the exits are and provide them with life jackets. Even with second or third-time buyers, advisers should do the explaining, ask the questions and not let the client’s family fall into: can’t pay so their home gets taken away.

With the latest evolution of factfinding, the adviser can provide an online client friendly factfind for the client themselves to complete when it is convenient, filling in sections without feeling pressured to do so all in one session. Once received the adviser or the administrator check the completed work for omissions or anomalies.

Armed with the hard facts provided by the client, the adviser is able to focus on the soft UYC spending his valuable time discussing the options for mortgages, protection and insurance thus demonstrating the added value they provide. Once they have both the KFC and the UFC covered, advisers can then benefit from their fully integrated practice management system to find the most appropriate products for the client’s specific needs. The efficiencies gained from this technology frees up even more of the adviser’s precious time.

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